This study recommends that for short-term insurers to improve their performance on their ROA, ROE and UPROF, they will have to increase their retention ratio through the reduction of reinsurance contracts. This will lead to low reinsurance ratios allowing room for net premiums to be available to the firm. Another way to increase profitability will be to diversify the business lines of insurers, increase leverage and increase the asset size of the firm. However, having multiple business lines will require additional set-up and regulatory costs i.e. capital whiles high leverage has the potential to cripple the business due to high debt cost. Insurers have to employ strong and experienced underwriters to ensure minimal underwriting
risk which has the potential to increase the financial performance of insurers in the short-term insurance market.
5.5 Recommendations for Future Research
This study looked at the impact of reinsurance on the financial performance of short-term insurers in South Africa. It also considered four other variables before concluding on their impact on financial performance. This study therefore recommends that another study should be conducted which will focus on other factors of reinsurance such as the impact of reinsurance on solvency, liquidity and capital requirements. Another consideration will be to conduct a similar study that covers more recent data including 2017 financials of short-term insurers. The study can be improved by a further research which employs various measures of financial performance like cash flows, earnings per share and revenue growth.
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APPENDIX: LIST OF SHORT-TERM INSURANCE COMPANIES IN SA
No. Name of player
1 Abacus 2 Absa 3 Absa Idirect 4 Absa Risk 5 AECI Captive 6 AGRe 7 AIG 8 Alexander Forbes 9 Allianz Global 10 Attorneys 11 Aurora
12 Auto & General 13 Bidvest 14 Bryte Insurance 15 Bryte Risk 16 Budget Insurance 17 Centriq 18 Chubb 19 Clientele General 20 Coface 21 Compass 22 Constantia 23 Corporate Guarantee 24 Credit Guarantee 25 Densecure 26 Dial Direct 27 Discovery 28 Emerald 29 Enpet Africa 30 Escap Limited 31 Etana Insurance 32 Export Credit 33 Exxaro
34 FEM 35 First Central 36 First For Women 37 Firstrand 38 G4S 39 Genric 40 Guardrisk 41 HDI Global 42 Hollard Insurance 43 Home Loan 44 IGF 45 Indequity Specialised 46 Infiniti
47 Khula Credit Guarantee 48 King Price 49 Landbank 50 Legal Expenses 51 Lion of Africa 52 Lombard 53 Miway 54 Momentum Alternative 55 Momentum STI 56 Momentum Structured 57 Monarch
58 Mutual & Federal 59 Mutual & Federal Risk 60 Nedgroup 61 New National 62 NMS 63 Nova Risk 64 Oakhurst 65 Oakleaf
66 Old Mutual Health 67 Orange
69 PPS 70 Rand Mutual 71 Regent 72 Relyant 73 Renasa 74 Sabsure 75 Safire 76 SAHL 77 Santam 78 Santam Structured 79 Sasguard 80 Sasria 81 Saxum 82 Shoprite 83 Standard Insurance 84 Sunderland Marine 85 Unitrans 86 Vodacom 87 Western National 88 Workers Life